Benefits and problems of registering a company in Brazil

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Benefits and problems

Advantages of Brazil company registration

A Brazil company incorporation requires one director and two shareholders. Moreover, corporate directors are also allowed in a Brazil incorporated company.

Dynamic growth opportunities

Multinational firms are attracted to Brazil because of the massive growing consumer market. Brazil is the world´s sixth largest economy, one of the top 10 fastest growing economies in the world and the largest economy in Latin America with average annual growth of 6% since 2006;

As of 2015, 52% of Brazil’s population is middle-class. Annual GDP growth of 6% also means family incomes are rising, meaning demand for foreign company products and services is rapidly increasing;

The tourism, services and infrastructure sector provide huge opportunities to foreign investors because of the 2016 Olympic Games;

Brazil has one of the largest renewable energy programs in the world. Brazil produces 25% of the world’s ethanol and has been adding new biomass and wind power plants to the country. Brazil currently produces 70% of the total wind energy in entire Latin America;

In Brazil, 60% of qualified workers are computer literate. This rate will vary depending on the state where you want to incorporate the company;

Within a week, Healy Consultants can supply our Clients’ a turnkey solution including i) a company number and address, ii) an already approved corporate bank account and iii) a tax id number.

Brazil is a member of Mercosur. Consequently, they enjoy reduced tariffs, less restrictions and greater government protection when trading with member countries, such as Argentina, Uruguay, Bolivia, and Venezuela;

Without suffering local capital gains tax, foreign investors can buy stocks directly on the BM&FBOVESPA, Brazil’s main stock exchange;

There are no withholding taxes on dividend distributions to non-residents whether corporate or individual;

All dividends distributed by a Brazilian company to both nonresident individuals and corporate entities are exempted from withholding tax;

Our Clients find it easy to divest from Brazil, if their earnings are not as good as expected. Brazil indeed does not apply capital controls and all divestments will furthermore be exempted from i) capital gains tax and ii) withholding tax, provided the initial investment has been properly registered with Brazil’s Central Bank.

Problems with Brazil company registration

Brazil has been ranked 80th out of 137 countries in terms of its Global Competitiveness in the Global Competitiveness Index 2017-18 edition by the World Economic Forum. This is due to the country’s unstable macroeconomic environment as well as poor goods market and labour market efficiency.

Taxation burden

Resident Brazil companies suffers high taxes. Average corporate tax rate is 34% and VAT can be as high as 25%. Income tax ranges from 8% to 28%;

The Government levies protectionist import taxes that range from 2% to 20%, depending on product;

In addition to corporation tax, there are also taxes on gross revenue including i) a federal tax of 2% levied on domestic and foreign manufactured products and ii) a mandatory social security contribution tax of 7.6%.

Business challenges

Brazil’s transportation infrastructure is of a poor standard, making it difficult to export goods to the other Latin American countries;

Government agencies are inefficient. For example, i) it takes around 8 weeks to get immigration visas and ii) around 20 weeks to get your company fully incorporated;

According to an international study done by EF English Proficiency Index (EF EPI), Brazil has a very low proficiency of English, placing 38th out of 63 countries. Entrepreneurs will find it difficult to find business partners and employees who speak any English;

The Brazilian economy is highly dependent on China, the largest consumer of Brazilian exports. With the Chinese economy slowing down, the Brazilian economy dramatically slowed in 2014;

To do business in Brazil, entrepreneurs must speak Portugese or hire a translator.

Brazil lacks a well-educated labour force and the available skilled labour is more expensive than in other South American countries. A mere 41% of adults have a high school degree, which is significantly lower than the OECD average of 74%. On average, the annual salary of skilled degree educated employee is US$20,706;

Although Brazil has had no terrorist attacks for many years now, it is one of the most dangerous countries in the world in terms of street crime, with a murder rate 4 times higher than the US. People planning to move to Brazil will need to spend additional money for security and private transportation.

Incorporation challenges

For Brazil business registration, it is necessary for a foreign company to have a Brazilian permanent resident as a legal representative. If required, Healy Consultants will provide this nominee service;

Foreign company set up in Brazil is time consuming and complex, bogged down by Government bureaucracy. Company registration can take up to 20 weeks, including time required for all Client supporting documents to be translated into Portuguese;

Taxation is punitive in Brazil, and our Clients should expect to pay a whopping 68% tax on net profits including i) corporate tax of 34%, ii) average VAT rate of 20%, and up to 45% on products distributed across Brazil provinces and iii) employer’s social security contributions of 37% of gross salaries.

Best uses of a Brazil company

Online business in Brazil is a lucrative industry. Brazilians are already spending $13 billion a year online, despite only 40% of the country having internet access. As internet access improves, this section of the economy is expected to grow rapidly;

Brazil is a viable manufacturing hub, with the 2nd largest industrial sector in the Americas and boasting an abundance of i) cheap raw materials including iron ore and coal and ii) natural resources such as crude oil.

Contact us

Testimonial

“Pirster Pte is happy with the work that Healy Consultants undertook for the company. International incorporation can be fraught with opacity, anxiety and vulnerability - especially if it is being done remotely as we did. Healy Consultants worked really hard to make it transparent, straight forward and confidence-inspiring. I look forward to working with Healey Consultants again on future work and happily recommend them to others.”

Fiona Thompson, Managing Director Pirster Pte.

“We had taken Healy Consultants assistance in incorporating our entities in some of the complicated jurisdictions. Their approach right from the beginning has been very systematic, clear and efficient. It has been a pleasure to work with all of them.”

“Thank you Healy Consultants for swiftly project managing my engagement. From the moment I met you in Singapore Healy Consultants attended to my requirements and specific needs. I am more than satisfied with your service. Moreover, your weekly updates allowed me to continue to focus my attention on my global business while trusting you to deliver as promised.”

“Thank you Healy Consultants, you were instrumental in setting up of my Hong Kong based company, the whole process was completed in a professional and timely manner.”

Terry Skews, CEO Brittany Offshore Limited

“Healy Consultants, a professionally managed firm with clear understanding and knowledge about what client expects from them and delivers the same in a professional and timely manner. Kudos to their team.”

“Incorporating any company is comparable to setting the foundation blocks of your new company building, which you aim to build in the best location available. By choosing Healy Consultants you are laying the perfect foundations.”

“The one word that defines Healy Consultants is perfect professionalism. If you have Healy to set up your business abroad, you could focus on the operational overhead and let Healy take care of the rest. From Incorporation to Taxation, it’s a one stop solution. Rest assured, you will have the best people in the Industry working for you and providing you with the best possible information and suggestions.”

Raja Chakraborty, Director Streamlyn Pte. Ltd.

“Thank you Healy Consultants for successfully project managing our business set up in Kuwait, Lebanon, Qatar and Bahrain.”

“When it was time to establish a Space Academy in Singapore, TriVector needed a knowledgeable firm that could not only help us establish our infrastructure, but could also advise on the local and regional business climate. Healy was that firm, which is why we've been satisfied Healy Consultants for almost five years now.”

“Healy Consultants were instrumental in the set up of our company. They have continued to provide exceptional support and advice over the years.”

Susan Gunnery, Managing Director Qudoss Group

“Healy Consultants is the best firm that we have ever worked with. Through our entire business relationship we were satisfied with provided level of quality and services. Healy Consultants have been responsive and detail oriented which has allowed us to stay focused on our business and not getting distracted with small details.”

Testimonial

“Pirster Pte is happy with the work that Healy Consultants undertook for the company. International incorporation can be fraught with opacity, anxiety and vulnerability - especially if it is being done remotely as we did. Healy Consultants worked really hard to make it transparent, straight forward and confidence-inspiring. I look forward to working with Healey Consultants again on future work and happily recommend them to others.”

Fiona Thompson, Managing Director Pirster Pte.

“We had taken Healy Consultants assistance in incorporating our entities in some of the complicated jurisdictions. Their approach right from the beginning has been very systematic, clear and efficient. It has been a pleasure to work with all of them.”

“Thank you Healy Consultants for swiftly project managing my engagement. From the moment I met you in Singapore Healy Consultants attended to my requirements and specific needs. I am more than satisfied with your service. Moreover, your weekly updates allowed me to continue to focus my attention on my global business while trusting you to deliver as promised.”

“Thank you Healy Consultants, you were instrumental in setting up of my Hong Kong based company, the whole process was completed in a professional and timely manner.”

Terry Skews, CEO Brittany Offshore Limited

“Healy Consultants, a professionally managed firm with clear understanding and knowledge about what client expects from them and delivers the same in a professional and timely manner. Kudos to their team.”

“Incorporating any company is comparable to setting the foundation blocks of your new company building, which you aim to build in the best location available. By choosing Healy Consultants you are laying the perfect foundations.”

“The one word that defines Healy Consultants is perfect professionalism. If you have Healy to set up your business abroad, you could focus on the operational overhead and let Healy take care of the rest. From Incorporation to Taxation, it’s a one stop solution. Rest assured, you will have the best people in the Industry working for you and providing you with the best possible information and suggestions.”

Raja Chakraborty, Director Streamlyn Pte. Ltd.

“Thank you Healy Consultants for successfully project managing our business set up in Kuwait, Lebanon, Qatar and Bahrain.”

“When it was time to establish a Space Academy in Singapore, TriVector needed a knowledgeable firm that could not only help us establish our infrastructure, but could also advise on the local and regional business climate. Healy was that firm, which is why we've been satisfied Healy Consultants for almost five years now.”

“Healy Consultants were instrumental in the set up of our company. They have continued to provide exceptional support and advice over the years.”

Susan Gunnery, Managing Director Qudoss Group

“Healy Consultants is the best firm that we have ever worked with. Through our entire business relationship we were satisfied with provided level of quality and services. Healy Consultants have been responsive and detail oriented which has allowed us to stay focused on our business and not getting distracted with small details.”

“Not only did Healy Consultants have expert knowledge of local requirements, they also understood my needs as a foreigner, which is something lacking with the Singaporean consulting firms I spoke to. They drove the process from start to completion. I’m more than satisfied with the service.”